Rate Cut Hopes On Hold

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Market Snapshot: Overnight Moves

Daily Updates:

• On Sunday, Japan’s Prime Minister Sanae Takaichi said that the Japanese government would be ready to intervene in financial markets after the recent spikes higher in JGB yields and continued weakening of the Japanese yen. 
• “It is not for me as a prime minister to comment on matters that should be determined by the market, but we will take all necessary measures to address speculative and highly abnormal movements”.

• According to Bloomberg, there was also speculation on Friday that Japanese authorities may, alongside help from the US, enter foreign-exchange markets — resulting in major volatility in Friday’s session. 
• The yen weakened to as much as 159.23 to the US dollar, before reversing its slide after Bank of Japan Governor Kazuo Ueda ended his post-meeting press conference. 
• By the end of Friday’s session, the yen had strengthened to 155.63 against the dollar (and now trades at 153.61), marking the biggest one-day rally in the currency since August 2025. 
• That occurred on speculation that the Federal Reserve Bank of New York had contacted financial institutions to ask about the yen’s exchange rate —  a price enquiry that was taken by Wall Street as a sign that the Fed is potentially laying the groundwork for intervention with Japan.

• A few hours after Ueda’s press conference ended, Atsushi Mimura, the Finance Ministry’s top currency official in charge of the yen, declined to comment on whether a rate check was conducted. 
• Talking to reporters earlier today however Mimura said, “We will continue responding appropriately against FX moves, working closely with US authorities as needed, in line with the joint statement issued by the Japanese and US finance ministers last September”, though still maintained that he had “no intention” of responding to speculation about whether any rate checks were conducted on Friday. 

• Also weighing on macro risk sentiment is the potential for another US government shutdown. 
• Democratic leader Chuck Schumer in the Senate announced that he would block a funding package next week unless Republicans agree to remove funding for the Department of Homeland Security. 
• Senate Democrats (led by Chuck Schumer) believe that funding for the department should be stopped until Congress can agree on new guardrails for the Trump administration’s enforcement of immigration. 
• According to Polymarket, the probability of another US government shutdown by the end of the month surged from 9% to as high as 80% over the past 48 hours. 

• The increased risk-off sentiment from the macro environment appears to be taking its toll on crypto asset prices. On Sunday night, BTC fell just under $86K, while ETH now firmly trades below the $3K support level. Spot ETF demand has also failed to provide any meaningful support for either assets — Spot Bitcoin ETFs had their worst week since February 2025, seeing nearly $1.33B in net outflows last week. 
• Signs of defensive positioning are also appearing in derivatives markets. The 25-delta put-call skew ratio for 7-day BTC options currently trades close to -7%, after reaching -9% earlier in the day. Skew for ETH is also tilted towards downside protection — having fallen to -8% during early Asian trading hours. 
• Safe haven assets on the other hand however, continued reaching new record highs. Gold prices have risen above $5,100 per ounce for the first time in history, after rising 8% last week. 

• Japan may be on track to approve its first cryptocurrency exchange-traded funds as early as 2028, according to reporting from Nikkei Asia.
• The Financial Services Agency is said to be considering the addition of cryptocurrencies to the list of eligible “base assets” for ETFs, alongside tighter investor-protection requirements.
• If implemented, the change would enable major domestic players such as Nomura Holdings and SBI Holdings to bring Japan’s first crypto ETF products to the Tokyo Stock Exchange.

• South Korea’s third-largest crypto exchange, Coinone, is reportedly considering the sale of a portion of shares held by Chairman and largest shareholder Cha Myung-hoon.
• It’s stated in the report that the firm has held early discussions with overseas exchanges and domestic financial institutions about participating via equity investment, while noting that no terms have been finalised yet.

This Week’s Calendar:

Charts of the Day: